Shares of Moderna (MRNA 3.28%) have been plummeting in recent months. Although the market as a whole hasn't done well, the healthcare stock's 43% decline this year is far worse than the 19% drop that the S&P 500 has endured over the same period. As concerns shift from COVID-19 and onto inflation, investors have become less bullish on Moderna's stock. It also doesn't help that Novavax could obtain Emergency Use Authorization for its vaccine any day now.
But there is a catalyst that could change the stock's fortunes, one that could extend the prospects of Moderna generating COVID-19 revenue for the foreseeable future.
Moderna's new booster is effective in treating subvariants
One of the most frustrating things about COVID-19 is that there are so many variants to track. And it's difficult, if not impossible, to know which ones may cause serious problems for the world and which ones won't. Omicron was a significant variant when it emerged in November, and that prompted Moderna to create a booster shot which targeted that variant.
In March, the company began dosing participants with a new shot that combined its existing mRNA vaccine along with an omicron-specific booster. And on June 22, the healthcare company released findings from its bivalent booster candidate, mRNA-1273.214. The results were promising as the shot was effective against subvariants of omicron -- BA.4 and BA.5, which CEO Stéphane Bancel says "represent an emergent threat to global public health." Moderna is working on submitting the data to regulators in the hopes that its new booster could become available in August.
Could this spark the stock?
Since releasing the results, Moderna's stock has been the upswing. From a price of just under $130 on June 21, the healthcare stock nearly hit $150 this week. If the FDA ends up approving the shot, it could lift shares even higher. The shot could be key in preventing a resurgence of cases heading into the Fall.
The question, however, is how high the stock may rise. That will ultimately come down to a number of factors, including if COVID-19 case numbers spike and whether that creates significant demand for the new booster. If that does end up happening, then given how volatile the stock market has been over the past year, it's certainly not impossible to see a scenario where the stock could get back up to $400. And in the longer term, any additional revenue for Moderna could set the stock up for more gains down the road.
Moderna's COVID-19 vaccine has resulted in some terrific profits for the company (and gains for investors), with its net income over the trailing 12 months totaling $14.6 billion on revenue of $22.6 billion. Free cash flow has also been impressive at more than $13 billion. Anything that can help bolster these numbers will put Moderna in a stronger position to fund its future growth and potentially enable it to pursue acquisitions.
Should you buy Moderna's stock?
There's plenty of potential for Moderna, but there are also many question marks. That makes assessing the stock's value a challenge for investors. Even analysts have varying opinions, with some projecting the stock to rise to more than $200 while SVB Leerink expects the stock could crash to $70. Most are not bullish enough, however, to set price targets of even $300, let alone $400. A lot would undoubtedly need to go right for the company for Moderna's stock to reach those levels again.
While there is some promise for this new booster, that alone will likely not be enough to send Moderna's stock soaring. As a result, investors are better off waiting on the sidelines for now as this remains an incredibly volatile stock that may be too risky to be holding right now.
